Overhead absorption rate is a rate charged to cost unit intended to account for the overhead at a predetermined level of activity. On the basis of direct labour hours, direct labour cost or machine hours, overhead is attributed to a product or service.

How do you calculate overhead absorption rate?

To work out the overhead absorption rate using the production unit method, you need to divide the overhead cost by the number of units you're going to produce (or expect to produce).

How do you calculate absorption rate?

To find out the absorption rate in real estate, divide the total number of homes sold in a specific period of time by the total number of homes available in that market.